Singer:SmartBiz makes SBA loans easy. Businesses can go to smartbizloans.com and start an application online. They can get prequalified in about five minutes by entering their business and personal information. They can complete the application in about 30 minutes, and we can fund as fast as seven days from a completed application. It makes the process much easier than traditional SBA loans, where it can take a borrower three or four months if they go to their bank.
We also focus on $5, 000 to $350, 000 loans. Most banks don’t want to originate smaller loans because it costs them just as much to originate a $100, 000 loan as it does a $2 million loan. We’ve automated the origination process so we can do it a lot more efficiently than banks can. That’s why we can offer these smaller loans. [Editors’ note: As of October 2015, SmartBiz raised its minimum loan amount from $5, 000 to $30, 000.]
What’s the difference in the application process between SmartBiz and a traditional SBA loan?
Our application is online, and it’s dynamic: We’re only going to ask the questions that the business needs to answer. We also don’t require a business plan or projections. It’s a much more streamlined process for businesses to apply on the front end. Then on the back end, we can process it much much faster, so businesses will get their answer quickly.
Are there other things you’re looking at since you’re not looking at business plans and projections?
First, the businesses have to be in business for two years. The most important thing is they’ve got to have a prior history of demonstrating that they have the cash flow to support their loan payments. So if their payment is $1, 100 a month for a $100, 000 loan, they’ve got to show on their past tax return that they can afford an $1, 100 a month payment.
Next, we’ll look at the personal credit of the business owners. It doesn’t have to be great, but it’s got to be decent. We’ll also do a search of any public records on the owner. So they can’t have any bankruptcies or foreclosures in the last three years, they can’t have any open tax liens or collections. We also look at the business credit — a score that we get from FICO.
Are the loan products identical to SBA’s loan products?
Yes, it’s a traditional 7(a) SBA loan. The nice thing about SBA loans is that they have very low rates and long terms. Our rates are between 6% and 8% and our terms are 10 years, so a monthly payment for a $100, 000 loan is about $1, 100 a month. Everybody that offers SBA loans has to meet those parameters. [ As of October 2015, SmartBiz’s APR range was changed to 7% to 8%.]
Where does the money come from?
We have three lending partners on the platform, including Golden Pacific Bank based in Sacramento, California. They’re all part of the SBA’s Preferred Lenders Program.
Once businesses get the loan, what is their relationship like with the lender?
The businesses can have the funds deposited into the bank that they normally work with. We’ll automatically withdraw the payments from that account every month.
What else sets SmartBiz apart?
It’s not just more loans, but it’s also providing a better borrower experience. Most borrowers, when they think about SBA they think: good rates, low monthly payments, a really long, arduous process. With our product, we’ve taken that same long-term low payment that the SBA can offer, but we’ve turned the arduous process on its head by leveraging technology. I think it really changes the landscape of small-business lending because folks shouldn’t have to settle for 54% APR, or even for 15% APR.
If you can get a 6% APR 10-year $100, 000 loan with a $1, 100 monthly payment, you should take it. It’s far and away the best product for a small business that’s out there. They can get prequalified in five minutes and if they don’t get it, they’ll get a fast “no.” But if they can, it’s so much less expensive than everything else out there.
If an SBA loan is not for you, NerdWallet has come up with a list of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business, so that you know which loans you qualify for.
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Duy-Loan T. Le (born 1962, Vietnam) is an engineer and the first woman and Asian to get elected to the rank of Texas Instruments Senior Fellow.
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